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What were the short-term rental (STR) industry issues you encountered last year? Part of improving your property’s profitability is to identify the challenges you previously faced so they won’t compromise your portfolio’s growth.
Why is this important? Because the STR industry in London is poised for significant growth this year.
According to Tripadvisor’s Travellers’ Choice Awards, London is hailed as the world’s most popular destination this 2025. This means the demand for short-term accommodations will continue to rise as people flock to the city for a visit.
You don’t want industry issues to get in the way of maximising your property’s ability to thrive.
In this article, you’ll learn about the top 3 STR industry issues that London landlords struggled with – and the solutions that can help you keep these challenges from holding your property’s performance back.
STR Issue 1: Market Saturation in the Industry
The short-term rental (STR) market is expected to grow in the coming years. Industry experts reveal that the STR industry will reach £208.48 billion in value by 2030 as more people continue to recognise the lucrative opportunity it brings to their portfolio’s growth.
The Problem
While any news of growth should be treated as something good, it also means STR property owners have to face more competition this year. Industry reports reveal that 58% of property owners say that market saturation is the main issue they had to deal with in 2024.
Although private landlords have sold their rented homes because of greater restrictions and regulations, investors are snatching these properties and keeping them in the STR market. Not only that, there are still newly built rented homes being sold and these keep the competition fierce.
This will make it harder for STR properties to stand out and attract more bookings.
The Solution
The best way to survive a highly competitive market is to focus on what sets your property apart. If there’s none, then you need to invest in upgrades that’ll give you a competitive advantage.
For instance, there’s a rise in eco-conscious travellers. Make your STR property more sustainable so you can attract them. Highlight the unique features of your property so you can use it to set your listing apart.
You should also keep an eye on market data to see how the competition is moving or changing as the year passes. This will allow you to realign your letting strategy and ensure it’s keeping your occupancy rates maximised.
STR Issue 2: High Cost of Property Management Operations
Inflation has affected even the private rental market. The cost of managing a rental property can quickly pile up, especially for short-term rental properties. The frequent turnovers increase the need for housekeeping and maintenance. These will add to the cost of managing STRs.
The Problem
A year-end industry survey revealed that 55% of multi-property operators cite the cost of business as one of the challenges they had to overcome in 2024. It wasn’t just the inflation that was pushing the costs higher. Several factors were keeping the London property market volatile and it was making operations more costly than before.
Among the issues pushing costs higher included staffing, maintenance and the constantly changing STR regulations. Unless the rising operations costs are dealt with, the profitability of managing STR properties could be compromised.
The Solution
Solving the rising STR operation costs requires 3 things: technology, expert help and a bit of foresight.
Use a centralised property management system to streamline operations and automate tasks like bookings and maintenance services. Most property management software can manage bookings from multiple platforms. You can also use it to monitor all maintenance services to avoid missing important tasks. AI-powered tools can even make housekeeping and maintenance more efficient since these can factor in current traffic conditions and bulk scheduling services to keep logistics costs low.
Partnering with experts usually comes with these high-tech management systems and in-house cleaning and maintenance staff. Choose a company that offers end-to-end property management services like City Relay. You’ll get a complete package of services including guest management. By bundling the services, you can reduce overhead costs and ensure smoother operations.
With property experts helping you, it’ll be easier to evaluate your letting strategies to maximise the income potential of your STRs. Consider diversifying your income streams by using flexible letting. Combine short-term, mid-term and long-term letting to give you a higher and more predictable income potential.
STR Issue 3: Evolving Marketing Preferences
The success of an STR property lies in its ability to attract more bookings. Doing that would involve smart marketing strategies, including a deep understanding of guest preferences. If you can meet guest expectations, it can attract more bookings and eventually lead to a higher income potential.
The Problem
In 2024, almost 4 out of 10 London landlords mentioned that marketing is a pain point for them, specifically the changing guest behaviour. It’s aggravated by the growing competition and the changing regulations they also have to comply with.
All these changes add a layer of complexity that’s constantly transforming the STR industry. It means traditional marketing methods may no longer be enough to capture the interest of guests – at least, long enough for them to book a stay.
The Solution
While marketing STR properties is more challenging, there are strategies you can use to make your efforts more effective.
One is to focus on targeted marketing. Identify the guest profile that would be most attracted to your property. Take cues from the STR’s location and the unique features of your property. For instance, if your property is near tourist hotspots, target families and couples. Highlight public transportation options near you and various attractions.
If the property is near the business district, focus on business travellers. Add a functional workspace in the STR and offer high-speed WiFi. Highlight these features so they’ll know your property has what they need should they stay in it.
You should also make sure your property is completely compliant. This isn’t just for legal purposes but also to attract the right people to book a stay. The growth of eco-conscious travellers means more people are looking for sustainable homes. Upgrade your property to be more sustainable so you can attract this market.
Make Your STR Property Profitable in 2025
There will always be STR industry issues in London but as long as you stay updated you can realign your strategies to solve these challenges before they compromise your earning potential. The key is to focus on differentiating your STR and highlighting its unique features so it attracts more bookings. Staying compliant is also necessary to ensure your rental property won’t be compromised in any way. It’s also good to adapt to regulatory changes because it ensures your property standards are kept at a premium level.
Among all the issues mentioned in this article, it’s clear that streamlining operations plays a huge role in your property’s performance and profitability. By working with property experts, you can benefit from smart property management systems, streamlined processes (e.g. in-house housekeeping and maintenance) and round-the-clock guest relations.
If you’re ready to make your property stand out and be as profitable as it can be this year, contact City Relay. We’ll help you navigate London’s volatile rental market confidently this 2025.
